TSMC’s CEO Admits Chip Production Is “Insufficient,” Falling Three Times Short of Global Demand

TSMC has confirmed what many in the semiconductor industry have been anticipating for months. During remarks delivered at the SIA Awards, CEO C.C. Wei stated that global chip demand now exceeds TSMC’s production capacity by a factor of three, as reported by CTEE. This unprecedented imbalance reflects the intensity of the ongoing AI driven semiconductor supercycle.

According to Wei, even with new fabs under construction across Taiwan, the United States, and Japan, TSMC continues to face overwhelming demand for its advanced manufacturing nodes. Companies across the industry ranging from NVIDIA, AMD, and Intel to networking and ASIC vendors like Marvell and Broadcom are all fighting to reserve wafer capacity. The bottleneck is most severe at the leading edge, where 5 nm, 3 nm, and future nodes are the engines behind the latest AI accelerators, mobile SoCs, high performance CPUs, and custom silicon for hyperscale datacenters.

While Intel Foundry Services and Samsung Foundry offer competing processes, the market has consistently gravitated toward TSMC’s nodes during the peak of the AI boom. This has led to a situation where TSMC has become effectively the single most relied on supplier for cutting edge production, making it nearly impossible for the company to satisfy all incoming orders.

Compounding the challenge is TSMC’s long term capacity contracts with giants like Apple and NVIDIA, which lock in significant portions of its output years in advance. These allocated volumes leave limited flexibility for emerging or smaller customers, resulting in lengthy waiting periods across the broader supply chain. Wei described the advanced process shortage as “insufficient on an enormous scale,” with the imbalance expected to persist for several quarters.

The situation is generating opportunities for competitors. Japan’s Rapidus is accelerating its timeline toward 2 nm mass production by 2027, supported by government investment and increasing geopolitical demand for diversified semiconductor manufacturing. Meanwhile, Intel is pushing ahead with 18A and High NA EUV, and Samsung is ramping its GAAFET based processes. However, even with these developments, it remains uncertain whether big tech companies are willing to shift mission critical silicon away from TSMC’s proven track record.

The question now is not whether demand will ease, but how quickly the global semiconductor ecosystem can expand advanced node capacity. As AI workloads escalate and next generation accelerators transition into full production cycles, the pressure on TSMC is intensifying rather than slowing.

The coming years will reveal whether the industry continues to consolidate around TSMC’s leadership or begins to diversify out of necessity.

Do you think major AI companies will eventually move part of their production to Intel or Samsung, or will TSMC remain the single dominant supplier? Share your insights below.